SA Investment Strategy | Domestic fund managers' sector positioning in 1Q19: Where do we differ?
We have earlier highlighted that with the ANC national executive committee (NEC) unchanged until 2023, it might be difficult to reach consensus with the rent-seeking factions within the ANC, and progress on structural reforms will remain slow. That said, we prefer to hedge our exposure with an Overweight on SA Banks (Nedbank) and Food Retailers (Shoprite). Although fund managers appear to have trimmed Banks to a UW position in recent quarters, SA Banks remain the key beneficiary of any fixed investment turnaround in SA, and we remain OW. Banks should also benefit from increasing scope for a rate-cut in July'19. In contrast to consensus, we prefer Food Retailers (Shoprite) over Food Producers (AVI, Tongaat). Despite a consensus underweight, we recommend OW MTN.
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